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Trade War: China To Limit Access Of Rare Earth Metals Reader 06/18/2019 (Tue) 12:21:33 Id: 2a4975 [Preview] No. 14913
Amid the ongoing trade war with the US, consultations between China's National Development and Reform Commission (NDRC) and rare earth industry executives have laid the groundwork for limiting rare-earth element (REE) exports.

During a Monday press conference, the Chinese NDRC said it was developing new state policies on rare earth metals, and intends to make them public as soon as possible.

According to Deutsche Bank, the key conclusion from the recent meetings is that Chinese authorities are preparing to limit shipments of rare-earth permanent magnets in addition to rare-earth elements, thereby closing off what was termed an "escape route" by the Global Times. Beijing’s veiled threats to restrict exports of rare earth metals to the US have been called by many as one of China's nuclear options in a trade conflict with Washington. The US relies on China for about 80 percent of its rare earths supplies. The metals are used in everything from electric car motors and electronics to oil refining.

This corroborates the widespread assessment that REE exports are hardly the only outlet for such strategic materials. In order for China to more effectively leverage its strategic position, downstream products will also be included. The dollar value of US imports of two key categories of downstream product, NdFeB and SmCo magnets, is larger than the total imports of REEs from China.

A second key conclusion, according to Deutsche Bank's Michael Hsueh, reflected the idea that traceability and illegal mining must be considered as possible circumvention modes. Traceability was tagged by the Ministry of Industry and Information Technology (MIIT) as an objective in January, along with suspension of licenses for companies violating limits. While China has yet to provide a description of the tracing technology, traceability would be doubly helpful in preventing the use of illegally mined materials domestically and enforcing any export ban. Illegal production was estimated at 40-50 kt in rare-earth oxides in 2015, compared to official output of 105kt that year.

In terms of timing, Deutsche believes that a post-G20 escalation of the trade conflict would likely be required for China to enact any export ban. From China's point of view, the ideal scenario would preferably involve a short period of export limits. Without the assurance of sustainably high prices, the rest of world is more likely to remain cost challenged and deficient in investment. In this regard, the ability to engineer rapid price declines is just as much of a 'weapon' as price spikes. To the extent that ex-China investment was hampered by the decline in prices after 2011, this suggests ex-China incentive costs are likely above the USD 40/t level for PrNd oxide.

https://www.zerohedge.com/news/2019-06-17/china-roll-out-new-rare-earth-policy
https://web.archive.org/web/20190618120714/https://www.zerohedge.com/news/2019-06-17/china-roll-out-new-rare-earth-policy



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